AUSTRALIA GROUP 2006 PLENARY MEETING, PARIS, JUNE

C O N F I D E N T I A L SECTION 01 OF 07 PARIS 004219

SIPDIS

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DEPARTMENT PLEASE PASS TO AUSTRALIA GROUP COLLECTIVE

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TAGS: PARM PREL ETTC AS FR CBW
SUBJECT: AUSTRALIA GROUP 2006 PLENARY MEETING, PARIS, JUNE
12 - 15, 2006

REF: A. 2005 SYDNEY 534

B. 2005 SYDNEY 535

Classified By: ESTH/NP COUNSELOR ROBERT W. DRY FOR REASONS 1.4 (B) (D)
(E) AND (H).

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SUMMARY
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1. (SBU) The Australia Group (AG) plenary continued
strengthening the Regime,s nonproliferation and export
control tools. Highlights included:

-- Agreement to the U.S. proposal to add three biological
agents to the control list;

-- Agreement to add chemical processing equipment made from
niobium and niobium alloys to the chemical equipment control
list;

-- Agreement to move to a secure web-based information system;

-- Broad support for Croatian membership, but deferral of a
decision until 2007;

-- Acknowledgement of Russia,s interest in AG membership,
but expression of serious concerns about Russian treaty
compliance and export controls;

-- Agreement to continue with enhancements to the AG website
as initially agreed in 2005;

-- Fulsome information (intelligence) and enforcement experts
exchanges that reinforced the need for continued AG action on
emerging technologies. End summary.


2. (U) The Australia Group Plenary was held in Paris, June
12-15. The meeting consisted of an opening Plenary Session,
an Implementation Meeting, Information Exchange, Enforcement
Officer,s meeting, and a closing Plenary Session.

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(U) CHAIR,S INTRODUCTION
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3. (SBU) Australia Group Chair John Sullivan identified the
AG,s commitment to UN Security Council 1540, the desire for
strong information, export, and enforcement components of the
Plenary, and a focus on biological security and intangible
technology as the key areas for this year,s meeting.

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(U) PLENARY SESSIONS
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4. (C) Opening Statements. Ukraine made an opening
statement expressing its strong commitment to AG
nonproliferation commitments. The United States made an
opening statement outlining U.S. priorities for the Plenary.
In addition, del thanked Australia for all their efforts
related to the AG, as well as the former U.S. head of
delegation Vann Van Diepen for contributions made over a
number of years.


5. (SBU) Australia Group and International Conventions.
The Netherlands presented a paper on the activities of the
Organization for the Prohibition of Chemical Weapons (OPCW).
Specifically, it noted the slow progress on of chemical
weapons (CW) destruction, the one year extension of the
Action Plan for National Implementation, improvement in the
area of universality, limited progress in industrial issues,
a new facilitation to design a payment mechanism for
countries in arrears, discussion on a temporary office of the
OPCW in Africa, the first annual Remembrance Day for all
victims of chemical weapons attacks, preparations for the
tenth anniversary of the OPCW in 2007, and the beginning of
preparations for the second Review Conference in 2008. The
UK made a presentation on actions taken over the past year
under the Biological Weapons Convention,s Program of Work,
including the third meeting of experts, the third annual
meeting, and the preparatory committee meeting.


6. (C) Membership.


A. Croatian Membership. The Plenary welcomed Croatia,s
membership application, noted Croatia,s commitment to
international nonproliferation efforts, and pledged to assist
Croatia to strengthen some aspects of its export control
system. While not yet in a position to approve Croatia,s
membership application, the Group looked forward to Croatia
becoming a member in the near future. (Comment: U.S. del
coordinated closely with the EU and other key dels on this
issue. EU Presidency rep pointed out that the EU statement
called only for membership in the near future, not this year.
Del received no/no criticism for the U.S. position that
Croatia is not quite ready. End comment.)

B. Russian Membership. AG members noted that while Russia
was an important supplier country of AG controlled items,
there are significant gaps in its export control system and
ongoing questions regarding its compliance with the CWC and
BWC. Several countries indicated their intention to continue
bilateral work with Russia. Specifically, Canada indicated
that the time was not yet right for Russian membership in the
AG and stated that it is willing to work with Russia on
enforcement controls as well as in the context of the Global
Partnership. Japan stated that it was premature to discuss
Russian membership as they have not yet submitted an
application to the Group; however Japan does not believe
Russia has fully implemented its CWC and BWC commitments and
are concerned with Russian CBW export controls and
enforcement capability. Germany welcomed Russia,s desire to
comply with its CBW nonproliferation commitments and believes
that the effectiveness of the regime would be improved by
Russian membership only if Russia was committed to being an
effective player. (Comment: In the information exchange
(see septel) the UK was very critical of Russian compliance
and export control performance. In informal discussions, a
number of delegates who also attend MTCR, NSG and Wassenaar
meetings were highly critical of Russian behavior in those
meetings. In summary, U.S. position opposing Russian
membership was in the mainstream. End comment.)


C. Interest by other states. The Chair advised the group of
Chile,s intention to submit a formal application to join the
AG in the near future.


7. (SBU) Strengthened Outreach. The Plenary endorsed the
Chair,s report on outreach activities and noted requests
from Cambodia, Hong Kong, Serbia and Montenegro, and Taiwan
for export control assistance. The Plenary noted the
Chair,s report on outreach activities to Singapore and the
UAE, as well as plans to conduct outreach to Thailand, Israel
and South Africa in 2006. In addition, in light of
Croatia,s desire for AG membership, the Group agreed to
conduct outreach to Croatia. Canada indicated its
willingness to undertake outreach to countries of the former
Soviet Union. AG members reported on their own outreach
activities:


A. The EU provided an update on its CW, BW, and UNSCR 1540
joint action.


B. Japan briefed on its activities over the last year and
focus on assistance in East Asia as well as its CWC/BWC
universality outreach efforts.


C. Korea indicated that it plans to hold a transshipment
seminar in Thailand in July.


D. The U.S. flagged its outreach efforts and distributed a
paper highlighting its outreach assistance.


E. Canada briefed on its work with the G-8 Global
Partnership program and efforts relevant to the AG.


F. Argentina briefed and circulated a paper on its recent
UNSCR 1540-related seminar.


8. (C) Regional Nonproliferation


A. Asia-Pacific Regional Action Plan. Australia briefed on
its outreach activities since the last Plenary, in Vietnam,
Malaysia, Cambodia, and the Philippines under the
Asia-Pacific Regional Action Plan. Australia has continued
to undertake scoping visits and tailor the assistance and
training offered to best meet the needs of the target country.


B. Balkans Regional Action Plan. Hungary and Bulgaria
reported on three seminars organized since the last Plenary
in Budapest and Sofia under the Bulgarian-Hungarian Regional
Action Plan for Western Balkan Countries. The seminars
focused on the legislative and administrative aspects of
dual-use export controls, specialized training for border
customs officers, and industry outreach issues.


9. (C) Strengthening and Maintaining the Australia Group.


A. Amendment to the AG Guidelines. The Plenary welcomed the
proposal to amend the AG Guidelines to incorporate
consideration of the role of distributors, brokers, or other
intermediaries when evaluating export license applications.
Germany, Switzerland, the Netherlands, and the ROK indicated
a need to discuss this issue further during the
intersessional period and suggested that the issue be
revisited during the upcoming ROK brokering seminar in July.


B. Interaction with UNSCR 1540 Committee. The Plenary
agreed to enhance the Group,s contacts with the UNSCR 1540
Committee and noted that future contact could usefully
include a technical briefing by the Group to the Committee.


C. AG Information System. The Plenary agreed to move to a
secure web-based information system and agreed to a proposed
cut-over day of 30 September for the distribution of all
unclassified and AG-In-Confidence documents.

SIPDIS

D. AG website. The Plenary agreed in principle to proceed
with enhancements to the AG website, taking into account any
content-related concerns by delegations. The Chair indicated
that it would welcome any assistance with portions of the
website and welcomed the translation of the website into
Arabic, Russian, and Chinese.

E. AG Trust Fund. The Plenary endorsed the Chair,s request
to use funds contributed to the AG by other members for
continued website enhancement, updating website software, and
production of an updated AG brochure.


F. Inter-regime cooperation. The Plenary noted that while
outcomes of these meetings had been limited, interaction
between the regimes was a valuable mechanism to share
information on meeting dates, outreach activities, and themes
of common relevance.

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IMPLEMENTATION MEETING
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10. (C) Chemical Issues


A. Factors for Consideration. The Plenary did not reach
consensus on the proposal on &Factors for Consideration for
the Addition of Chemicals to the Australia Group Control
List8 (AG/May06/CL/GB/26 & AG/May06/CL/CH/5). The U.S.
supported the paper, noting that arms controls and
nonproliferation controls must evolve as the threat evolves
and the U.S. welcomes the UK/Swiss proposal as a
non-prescriptive approach. Germany also supported the
paper, but both France and Australia expressed concerns. On
the margins, Australia met with the U.S. delegation to
request support for merging the existing factors for
consideration (AG/Dec92/ExC/GB/16) and those proposed by the
UK and Switzerland. Additionally, France proposed a revised
draft for U.S. consideration. In a meeting on the margins,
deloff noted particular concerns with the revised French
proposal and recommended France work with the UK and
Switzerland to develop a new draft to be considered by the
group intersessionally.


B. (SBU) Niobium. The Plenary agreed to add &niobium
(columbium) and niobium alloys8 to the list of materials of
construction for chemical production equipment that contain
&tantalum, titanium or zirconium, or their alloys8
(AG/May06/CL/GB/27). Specifically, the Plenary agreed to
amend to the AG,s common control list for chemical
manufacturing facilities and equipment to add &niobium
(columbium) or niobium alloys8 as materials of construction
to controls on reaction vessels or reactors as a.8, to
agitators as b.8, to storage tanks, containers or receivers
as c.8, to heat exchangers or condensers as d.11, to valves
as g.8, to multi-walled piping as h.9, and to pumps as i.11.


C. (C) Microreactors. The U.S. distributed an information
paper on microreactors (AG/Jun06/Inf/USA/3). On the margins
of the implementation meeting, deloff spoke with members of
the German Delegation and asked them to convey the U.S. Paper
on microreactors to their respective technical experts and
forward any comments to the U.S.


11. (C) Biological Issues


A. Biological list additions. The Plenary agreed to the
revised U.S. proposal to add (1) Coccidiodides immitis, (2)
Coccidioides posadasii, and to revise the verotoxin entry to
read (3) verotoxin and shiga-like ribosome inactivating
proteins to the AG,s Common Control List
(AG/Jun06/CL/USA/11). This agreement resulted from intensive
intersessional deliberation by the Biological Agents Working
Group on the USG proposal to add 23 U.S. domestically
controlled, &Select Agents8 (AG/Mar05/CL/USA/8). The
working group was chaired by USA and had representatives from
Argentina, Australia, Canada, the E.C., France, Germany,
Japan, Netherlands, Norway, South Korea, Spain, Sweden,
Switzerland, and the UK.


B. Clarification of entry for Mycoplasma mycoides.
Consensus was not reached on the UK proposal to clarify the
existing entry on the Common Control List for Mycoplasma
mycoides (AG/May06/CL/GB/25). France expressed concern with
the proposal, consistent with its position during the
Biological Agents Working Group. Inexplicably, France
indicated that it could support the addition of two members
of the Mycoplasma mycoides phylogenetic cluster, namely
Mycoplasma mycoides subspecies mycoides SC (small colony) and
Mycoplasma capricolum subspecies capripneumoniae, type strain
F38. (Comment: France did not support these agents during
consideration of AG/Mar05/CL/USA/8.) The UK agreed to work
intersessionally with France.


C. Fertilized egg technology. The UK briefed on fertilized
egg technology to raise awareness by the Group on the
potential for misuse of large numbers of fertilized eggs as
growth media for viruses with BW applications. Large numbers
of these eggs are exported to Iran, the DPRK, and Syria
annually.


D. Addition of oligonucleotides to the &Genetic Elements8
language. The Plenary did not reach agreement on the last
minute Canadian proposal to include oligonucleotides for
sequences associated with pathogenicity of biological agents
and toxins on the Common Control List (AG/Jun06/CL/C/1). New
Zealand supported the proposal. The US, UK, and Sweden
expressed concerns that the proposal appears to undo the 2005
consensus on the UK,s definition of sequences associated
with pathogenicity. Canada requested countries provide them
with comments.


12. (C) Measures to combat CBW terrorism. Australia
presented information on its national controls on biological
agents and technology (including intangible technology
transfers). Australia has developed a two tiered list
relating to the hazards associated with those agents. In
addition, Australia registers facilities handling listed
biological agents and have an accreditation system.
(Comment: The Australian system appears similar to the USG,s
&Select Agent8 programs.) They also conduct outreach and
have criminal sanctions for non-compliance. Finally, they
are developing a regulation road map called &BioTracker,8
which is available through Biotechnology Australia.
Australia is interested in sharing information on how other
AG partners implement ITT.


13. (C) Further Enhancement of Implementation Measures


A. Brokering survey and discussion paper. Australia
presented two of the three papers on brokering; providing
results of the survey of AG participating government,s
brokering controls (AG/May06/ExC/AUS/16) and the common
themes and elements of best practices (AG/May06/ExC/AUS/17).
Consideration of the proposal to amend the AG Guidelines to
include brokering was considered during the Plenary (see
paragraph 9A).


B. Common approach to controls on exports to distributors.
The Plenary reached agreement on the German proposal for a
common approach to controls of exports to distributors
(AG/May06/ExC/D/28). In a meeting with Germany on the
margins, it was agreed that the common approach proposed by
Germany was a reminder to all of delegations of &best
practices8 in dealing with issues involving distributors and
did not codify or make any changes to the agreed AG
guidelines. The U.S. Delegation further noted that, in its
view, this proposed common approach did not represent or
require any changes to existing U.S. regulations. All
participants agreed with this observation and noted that the
words &in a manner consistent with their national law and
practices, in line with the Australia Group Guidelines8 in
the beginning of the proposed common approach and the caveat
&at least in cases of potential misuse or diversion8 in
clauses (b),(d),and (e) provided the necessary flexibility.


C. Implementation of catch-all controls. New Zealand
reported that their efforts to implement AG catch-all
controls was undergoing their parliamentary process. They
noted that the delay in implementing these controls, due to
their election process, provided them time to study the
legislation and regulations of others. They also noted that
they rarely export AG commodities. (Iceland rep, who
attended only briefly, indicated vaguely in an informal
conversation that &the issue is still under
consideration.8)


D. No Under-cut policy. The Plenary did not reach agreement
on the last-minute Czech proposal to modify the text of the
Australia Group no undercut policy which allegedly would make
it consistent with other multilateral export control regimes
(AG/Jun06/ExC/CZ/5). This proposal was supported by the EU
(since no one in the EU Caucus objected). The U.S. indicated
a need to study this proposal further. The AG Chair noted
broad support for the proposed change and the Plenary agreed
that the proposal be subject to a 90 day silence procedure.
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INFORMATION EXCHANGE AND JOINT SESSION
--------------

14. (C) Information Exchange. Forty-eight presentations
were made by twelve AG member countries on chemical and
biological programs; existing and emerging technologies of
CBW concern, trends and developments in CBW proliferation,
CBW terrorism, transshipment, supplier issues, and intangible
transfers of technologies. U.S. made twenty presentations.
Details of the exchange are reported septel.


15. (C) Joint Information Exchange/Enforcement Meeting. For
only the second time a joint session of Information Exchange
and Enforcement Experts was held. The focus on proliferation
networks was highlighted by the presentation of Japan
regarding China-Pakistan transshipments. U.S. made
presentations on deemed exports, including the most recent
updates to the Federal Register, and chemical weapon open
source web message boards.

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ENFORCEMENT MEETING
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16. (C) The enforcement exchange provided a valuable
opportunity to share experiences, discuss methods for
identifying and reducing non-compliance and strengthening
export controls. The 2006 Enforcement Experts session
highlighted legislative arrangements necessary to cover
&catch all8 elements, the capacity to deal with the transit
and transshipment of controlled items, and intangible
technology transfers; the necessary legislative structure to
provide effective prosecution and thereby deterrence of
attempts to circumvent controls; robust and timely
information exchange between members; and well developed and
coordinated domestic information and intelligence regimes,
particularly border controls, as required by UNSC Resolution

1540. Domestic and international coordination of these
elements ensures that non-compliance can be dealt with in a
timely and effective manner. Intangible technology transfers
were discussed in detail in opening statements and in case
studies.


17. (U) Enforcement Manual. The Canadian delegation
offered to translate the Enforcement Manual into Russian to
further assist the Russian attempts to meet Australia Group
membership requirements. The United Kingdom will continue to
voluntarily maintain the Enforcement Manual until another
member country assumes the position. In the meantime, there
were no changes or modifications to the manual.


18. (SBU) U.S. Presentations. U.S. del presented on Maine
Biological, a U.S. firm illegally exporting material to Syria
and on a Taiwanese case, as well as providing an overview of
Exodus Command Center and the outreach program, Project
Shield America.


19. (SBU) Other Presentations.

-- Netherlands presented on the Van Anraat case involving
precursor chemicals shipped to Iraq in the 1980,s for use in
production of mustard gas against Iran and Iraqi Kurds.

-- Japan summarized a UAV case and a freeze dryer case from
2002 involving transshipment through Taiwan with eventual
end-use in DPRK.

-- The United Kingdom presented on the risk assessment
process used in a sample case to determine whether or not a
license recommendation should be approved.

-- New Zealand presented on classifying goods correctly in
the HS Tariff system. This presentation presented further
discussion from several member countries regarding similar
problems with classifying chemicals.

-- The Republic of Korea also presented on the classification
of items within HS Tariff and the use of self-determination
and export licensing by Korean exporters.

-- The European Commission presented on the multiple hurdles
associated with the European Customs Inventory of Chemical
Substances and the problems relating to working under various
countries, regulations while stressing the need for a single
classification system.

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(U) PRESS RELEASE
--------------


20. (U) The AG approved the following press release:

&Media Release
2006 Australia Group Plenary
Entering its third decade of work to stop the spread of
chemical and biological weapons, the Australia Group held its
annual plenary in Paris from 12-15 June. The plenary
recognized the important role of the Group in forging
responses to new and emerging proliferation threats,
including from terrorists. Participants also considered and
agreed upon a number of important measures for deepening the
implementation and enforcement of national export control
systems.

In response to the need to ensure that export controls keep
pace with new and emerging threats, participants shared
information on the development and spread of new technologies
posing a potential proliferation threat. The plenary
recognized the role of niobium as an increasingly key element
in chemical manufacturing equipment suitable for the
production of chemical weapons, and agreed to introduce
controls on such equipment. Several biological agents
capable of being used to produce biological weapons were also
added to the control lists.

Participants undertook to take a common approach in
controlling exports to distributors and agreed to hold a
seminar to discuss best-practice measures to control
brokering activities. Tighter controls on the activities of
such intermediaries will help to combat increasingly
sophisticated procurement methods used by proliferations,
including terrorists. Participants also agreed to explore
the possibility of &labeling8 controlled equipment to help
address the challenge of managing trade in second hand
equipment.

The Australia Group welcomed the renewed mandate of the
Committee established by UN Security Council Resolution 1540
and affirmed the Group,s commitment to support the Committee
in promoting robust global implementation of export control
systems.

Increased acceptance in recent years of Australia Group
measures as the international benchmark for export control
standards relating to dual-use chemical and biological
materials and technologies has in large part been due to the
outreach activities of the Group. Acknowledging the
effectiveness of targeted, regional approached to outreach,
participants agreed on outreach strategies for the coming
year and exchanged information on planned activities.

The Australia Group website has proved an increasingly
valuable outreach tool, and participants welcomed its
availability in all official UN languages, with translations
into Arabic, Chinese, and Russian now online. The meeting
agreed to expand information on controlled items contained on
the website in order to increase its usefulness as a
reference tools for enforcement officers. Further
developments to the Australia Group Information System were
also agreed to facilitate increased sharing of secure
electronic information among the Group.

Discussions dealing with information sharing and enforcement
provided clearer insights into proliferation behavior by
state and non-state actors, as well as practical measures for
responding to these activities. Controlling the transfer of
know-how and technical information relevant to the production
of chemical and biological weapons without impeding
legitimate scientific research was acknowledged as an
important challenge. The plenary agreed to continue to
exchange ideas and experiences relating to the implementation
of controls in this area.

Participants reiterated their commitment to continue to
ensure that nonproliferation export controls did not hinder
legitimate trade and technical cooperation in the chemical
and biological sectors.

Further information on the Australia Group,s activities is
available at www.australiagroup.net.8

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PREPARATIONS FOR NEXT YEAR
--------------


21. (SBU) Suggestions from smaller nations. Since the AG
annual meeting is a key source of information for export
control officials from smaller countries US del sought
suggestions for next year from a number of them (including
Latvia, Malta, Luxembourg, Ireland, Argentina, Slovenia,
Lithuania, Romania, Czech Republic, and Estonia). Several
expressed particular interest in obtaining additional
specific information on proliferators and other unreliable
entities and additional case studies in order to improve
their enforcement capabilities. The information would be
welcome in either, or both, of the intelligence exchange or
in the enforcement experts meetings. Interest was also
expressed in information on new materials and technologies,
on the possibility of guest speakers on specific hot-topic AG
issues, practical information on transshipment controls,
information on watch list items for catch-all controls.


22. (SBU) Issues for a future agenda. Possible future
topics for U.S. papers: (1) implementing brokering controls;
(2) pandemic human influenza; (3) implementing ITT controls;
(4) review catch-all denial trends; )5) disposable
bioreactors; (6) labeling dual-use equipment; and (7) the
used equipment market.


23. U.S. Delegation:
Robert Mikulak ) Head of Delegation
Doug Brown ) Department of Commerce
David Flynn - Department of Energy
Andrea Garbe ) Department of State
Kristen Gass ) Department of State
Scot Gonzales ) Department of Commerce
Mary Hamman ) Department of Homeland Security
Kelly Hartley ) Department of State
Scott Hubinger ) Department of Commerce
Emily Pucci ) Department of State
Christian Westermann ) Department of State
Please visit Paris' Classified Website at:
http://www.state.sgov.gov/p/eur/paris/index.c fm

STAPLETON